Why Builders Are Turning to Private & Non-Bank Lenders for Construction Finance
A Shift in How Builders Fund Their Projects
The Australian construction industry is in the midst of a profound transformation. Once dominated almost exclusively by the big banks, the market for construction finance has diversified rapidly in recent years — and for good reason. Across residential, commercial, and mixed-use developments, builders are finding that traditional funding sources no longer align with the realities of modern construction.
Rising costs, regulatory tightening, interest rate volatility, and stricter lending criteria have all made bank finance harder to secure. In response, a new wave of private and non-bank lenders has stepped in — offering flexibility, speed, and a deep understanding of project-based lending that builders say is crucial to keeping developments on track.
At Renown Lending, we’ve seen this shift firsthand. More and more builders are approaching us not as a last resort, but as a strategic partner — one that understands how to structure finance around the dynamic realities of construction. This is not just a financial evolution; it’s a mindset change in how Australian builders approach project funding.
The Traditional Bank Model — and Why It’s Struggling to Keep Up
For decades, the big four banks were the natural go-to for construction finance. Their deep capital bases, long histories, and structured lending processes made them the cornerstone of the industry. Yet, over the past decade, the cracks have started to show.
Regulatory Pressures and Risk Aversion
Since the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, Australia’s banks have faced a sharp increase in regulatory scrutiny. Prudential measures by APRA (the Australian Prudential Regulation Authority) and tighter internal compliance frameworks have forced lenders to be far more conservative.
This means higher hurdles for builders and developers — including stricter pre-sale requirements, higher equity contributions, and more extensive documentation. For small to mid-tier builders, these requirements can be prohibitive. Even experienced developers can find their projects stalled while banks conduct drawn-out credit assessments.
The Cost of Delay
In construction, time is money — literally. A few weeks of delay in finance approval can cascade into months of lost productivity, contract variations, and cost blowouts. Builders juggling multiple projects cannot afford to have capital tied up waiting for a decision.
Traditional banks, bound by bureaucratic processes and centralised credit departments, often move too slowly for the pace of today’s development cycle. This is especially problematic in a high-inflation environment where material and labour costs are constantly shifting.
The Market Reality
Over the last two years, data from the Housing Industry Association (HIA) and CoreLogic shows a notable contraction in bank-approved construction finance, particularly for small to mid-scale projects. Meanwhile, non-bank lenders have reported double-digit growth in their construction loan portfolios. The message is clear: builders are looking elsewhere.
The Rise of Private and Non-Bank Lenders
The New Normal in Construction Finance
Private and non-bank lenders have evolved from niche players to major participants in Australia’s construction finance ecosystem. The growth of the private credit market — estimated at over $250 billion nationally — reflects a structural shift in how capital is deployed.
These lenders operate outside the banking regulatory framework, allowing them greater agility in decision-making and risk assessment. They often have shorter turnaround times, flexible structures, and direct relationships with borrowers.
What Builders Value Most: Speed, Flexibility, and Partnership
Builders aren’t simply chasing easy money — they’re seeking partners who understand construction risk, timelines, and liquidity pressures.
Private lenders like Renown Lending can:
Approve funding in days, not months.
Offer progressive drawdowns aligned with construction milestones.
Structure finance around project feasibility, not just rigid pre-sale thresholds.
Evaluate applications with an understanding of real-world construction variables.
For builders, this can make the difference between breaking ground or losing a contract.
Market Trends Driving the Shift
Several macroeconomic and industry-specific factors are accelerating the shift toward private lending in Australia.
Rising Construction Costs and Supply-Chain Volatility
From 2021 to 2024, construction input costs rose by over 30% in some categories. Global supply chain disruptions, labour shortages, and inflation have created an unpredictable cost environment.
Banks often respond to volatility by tightening credit, demanding higher contingencies, or reassessing valuations mid-project. Private lenders, by contrast, are typically more adaptive — understanding that cost pressures are part of today’s reality, not an exception.
Interest Rate Volatility
While the Reserve Bank of Australia’s (RBA) tightening cycle may have paused, financing conditions remain elevated compared to the ultra-low-rate era. For banks, this means stricter serviceability calculations and reduced risk tolerance. Private lenders can take a more pragmatic approach — focusing on project viability and exit strategy rather than cookie-cutter affordability ratios.
The Growth of Private Credit in Australia
According to KPMG’s 2024 Alternative Lending Report, private credit has grown at over 15% annually for the past five years. Institutional investors, superannuation funds, and family offices are increasingly backing private lenders, drawn by attractive risk-adjusted returns.
This influx of capital has made private lending both more competitive and more accessible to builders — further cementing its role in mainstream finance.
The Impact of Delayed or Withdrawn Bank Funding
There have been numerous high-profile cases where bank funding was withdrawn late in a project’s life cycle due to updated risk models or missed pre-sale thresholds. In such cases, private lenders have stepped in to rescue otherwise viable projects. This has strengthened trust between builders and private lenders, establishing them as essential players in the construction ecosystem.
What Builders Are Really Looking For
Builders aren’t just seeking capital — they’re seeking confidence.
Here’s what the modern builder values most in a finance partner:
Speed and Certainty
A private lender’s ability to assess and approve finance quickly can make or break a project. The certainty of funding allows builders to commit to suppliers and contractors without fear of delay.
Flexibility in Structuring
Private lenders like Renown Lending often tailor finance around the project, offering options such as:
Lower pre-sale requirements
Interest-capitalised structures
Progressive drawdowns
Bridging or mezzanine finance for projects between major funding milestones
Specialist Knowledge
Builders want to work with financiers who understand the construction process — from site acquisition to completion. Renown Lending’s team includes professionals who have worked within construction and property development themselves, ensuring we speak the same language as our clients.
Relationship-Based Approach
In contrast to the transactional nature of banks, private lenders operate through relationships. This relationship-driven model allows ongoing communication, flexibility, and problem-solving if challenges arise during the build.
What Builders Should Still Watch For
While private lending offers flexibility and speed, it’s not without risk. Builders should approach financing decisions with due diligence.
Pricing and Transparency
Private construction finance can carry higher interest rates or fees than bank loans. Builders should ensure they understand the true cost of capital — including establishment fees, valuation costs, and exit fees — and compare the total value against the advantages of faster, more flexible access to funds.
Lender Credibility
Not all private lenders are created equal. Builders should partner with established, reputable firms — like Renown Lending — that have a proven track record of transparency, fair dealing, and successful project completions.
Legal and Regulatory Awareness
Even though private lenders operate outside traditional banking regulations, responsible players still adhere to best-practice governance and responsible-lending standards. Builders should avoid informal or unlicensed financiers that may expose them to legal complications.
Project Risk Management
Cost blowouts, builder insolvencies, and unexpected delays remain real risks. A quality finance partner will actively help mitigate these risks through realistic budgeting, milestone-based drawdowns, and clear exit strategies.
How Renown Lending Supports Builders
At Renown Lending, we’ve built our reputation on understanding the realities of construction — not just the numbers on paper.
Tailored Finance Solutions
We offer a range of construction and development finance options designed for builders, developers, and investors, including:
Construction loans with progressive drawdowns
Development funding for small to mid-scale projects
Bridging and mezzanine finance
Refinance or rescue funding for delayed or withdrawn bank loans
Each solution is tailored to the project’s scale, stage, and risk profile — ensuring a structure that supports completion, not constraint.
Fast, Transparent Processes
Renown Lending prides itself on delivering fast approvals, clear communication, and no hidden surprises. Our credit assessments are pragmatic and focused on the project’s viability rather than rigid metrics.
We also work closely with builders to ensure they understand their financing terms, timelines, and drawdown process. This transparency builds trust and long-term partnership.
Real-World Expertise
Our team understands that every construction project is unique. With decades of combined experience across lending, property development, and project management, we bring practical insight into every deal — not just financial analysis.
Partnering Through Challenges
When challenges arise — from delays in approvals to changes in project costs — Renown Lending’s approach is to work collaboratively with our clients. We believe in proactive communication and problem-solving, not punitive measures.
Preparing for Private Construction Finance
For builders considering private finance, preparation is key.
Here are steps to strengthen your position and secure favourable terms.
Get Your Documentation Right
Having a complete project brief, feasibility study, and up-to-date costings helps lenders assess your project faster. Include details like builder credentials, projected timelines, and sales/lease assumptions.
Maintain Strong Financial Records
Private lenders still perform due diligence. Up-to-date financials, tax returns, and cash-flow projections will streamline the process and demonstrate credibility.
Define an Exit Strategy
A clear repayment or exit plan — such as sales settlements, refinance, or asset retention — reassures lenders and strengthens your negotiating position.
Communicate Early
Engage with your finance partner early in the project. Builders who bring lenders into the conversation during planning — rather than at the last minute — typically achieve better terms and avoid costly delays.
Understand the Market
Keep informed on market trends, interest rate outlooks, and construction cost indices. A well-informed builder is a more confident negotiator and a more reliable borrower.
2025 and Beyond
The future of construction finance in Australia is being reshaped by several powerful forces.
Continued Growth in Private Credit
Private credit is expected to exceed $300 billion nationally by 2026, according to Deloitte. Builders who establish relationships with reputable non-bank lenders today will be well positioned to access capital as competition intensifies.
Regulatory Balance
There is growing recognition by regulators that non-bank lenders play a vital role in economic growth. While oversight may increase, it’s unlikely to mirror the rigidity of banking rules — ensuring continued flexibility for the private lending sector.
Focus on Mid-Tier Developers
As large institutional developers dominate bank lending pipelines, smaller and mid-tier builders are increasingly serviced by private financiers. This segment — often overlooked by banks — represents one of the biggest growth opportunities in the next five years.
Technology and Data-Driven Lending
Innovations in digital assessment, AI-based risk modeling, and real-time project monitoring are allowing private lenders to enhance efficiency and reduce risk. Builders will benefit from faster approvals and more accurate loan management systems.
Sustainable and ESG-Focused Projects
Private lenders are also beginning to prioritise projects with strong sustainability credentials. Builders focusing on green construction or energy-efficient developments may access better terms or greater investor interest.
The New Era of Construction Finance
The transformation in Australia’s construction finance landscape is not a passing trend — it’s a fundamental shift. Builders today are operating in a market where agility, speed, and partnership matter as much as price.
Traditional bank finance will always have its place, but the growing dominance of private and non-bank lenders reflects an industry that values real-world understanding over red tape.
At Renown Lending, we’re proud to be part of this evolution — partnering with builders across Australia to deliver finance solutions that keep projects moving and businesses growing.
The Renown Advantage
Speed: Streamlined approvals and responsive service.
Flexibility: Tailored solutions aligned to your project.
Expertise: Construction-savvy professionals who understand your business.
Trust: Transparent processes, fair pricing, and long-term relationships.
In a rapidly changing environment, finance isn’t just a line item — it’s a strategic decision that determines whether a project succeeds or stalls. Builders who embrace new funding models, backed by experienced partners like Renown Lending, are not just surviving — they’re shaping the future of Australia’s construction landscape.
To learn more about how Renown Lending can help fund your next construction project, visit RenownLending.com or speak with our team today.
